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President and CEO’s Message to Shareholders

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Expanding strategically while delivering solidly profitable growth

In 2019, Morneau Shepell delivered growth in revenues and profitability that strengthened our competitive position as the power brand in the employee wellbeing space. Revenues grew 23.1 per cent to $888.9 million, with Adjusted EBITDA increasing by 33.2 per cent to $182.5 million. Adjusted EBITDA margins increased to 20.5 per cent from 19.0 per cent compared to the previous year.

The significant upswing in year-over-year annual financial results is attributed to revenue from the mid-year acquisition of Mercer’s standalone, large market, health and defined benefit pension plan administration business in the United States, a full year of revenue from LifeWorks following its acquisition the previous year, and organic growth across the Company’s core lines of business.

We are pleased by our ability in the past year to complete and continue integrating strategic acquisitions that expand our global market presence while deepening our technological capabilities and talent base. Today our global business is anchored by four strategic hubs – located in Canada, U.S., U.K and Australia – for delivering solutions to some 24,000 clients in 162 countries.

In 2019, we also continued to develop our cloud-based wellbeing platform that unifies solutions from all our lines of business, providing employees of our clients with an integrated experience for everything they need to support their mental, physical, financial and social wellbeing.

During a year of strategic expansion, we maintained strong client satisfaction levels, which is a key marker of success in driving our business forward.

Positioned today for profitable growth tomorrow

Looking ahead, we’re confident Morneau Shepell is positioned to continue delivering profitable growth while driving ahead with our international expansion:

  • We are the only organization today that integrates solutions for the four key pillars of employee wellbeing: mental, physical, financial and social.
  • We are the world’s largest solutions provider in converging markets for wellbeing solutions and employee and family assistance programs.
  • We are the largest administrator of retirement and benefit plans in Canada with a fast-growing U.S. business, with some 8.5 million plan participants under administration at year-end 2019.
  • We are the largest provider of integrated absence management solutions in Canada and are positioned to continue growing this business into the U.S., a significant market opportunity for us.

As we move forward, we are focused on three growth strategies for being the clear market leader in the businesses in which we operate.

1. Own the wellbeing space.

As the power brand in employee wellbeing, we will differentiate by providing our clients with access to the full continuum of care that address a broad spectrum of needs, ranging from the most severe or complex physical and mental health issues, to reward and recognition strategies to mitigate workforce stress, anxiety and absence while increasing engagement. This strategy directly reflects the intent of our purpose: improving lives, improving business. By helping our clients improve the mental, physical, financial and social wellbeing of their employees, we help them improve workforce engagement and productivity.

2. Accelerate growth through U.S. and global expansion

Through strategic acquisitions in the past two years, we have significantly expanded our geographic market space and solutions portfolio. The Company is better positioned today to provide solutions on a global basis, including support for multinational enterprises seeking consistent quality in their wellbeing strategies that cross borders and serve large workforce populations. We expect acquisitions and strategic partnerships to play a continuing role in our expansion, supplementing our focus on driving organic growth in all our core lines of business.

3. Drive world-class delivery through people and technology.

We have the opportunity to create a sustainable competitive advantage by combining our cloud-based wellbeing platform with the talents and skills of our people. Our focus is merging the innovation speed of a smaller company with the global talent platform – the people – of a much larger one. We believe this is a uniquely competitive profile in our market space.

COVID-19 response

We are committed to and prepared to address the evolving risk posed by COVID-19. Early on, we activated our comprehensive Business Continuity Pandemic Plan and have a very active executive and management group coordinating our response globally.

We have regular communications with employees, updating them as new information is available. We continually assess and update our approach based on the changing environment, including things like travel restrictions, selfisolation in certain situations, working from home and restrictions on gatherings of people.We are communicating best available information and advice to help protect our employees. We are in ongoing communication with our clients to let them know we are prepared, fully operational and we are here to help. This includes information on our global crisis response, our digital service delivery of clinical service and leveraging the communication opportunities on our LifeWorks app. With that our clients are able to maximize the value we offer when they need us the most.

I would like to thank our employees for their swift actions in response to COVID-19. They responded quickly including disrupting regular work patterns, practicing physical distancing for those who were in the office, avoiding travel, and self-isolating when required. Currently, more than 90 per cent of our employees are working from home, and that number continues to increase.

Through all of this, our people continue to serve our clients around the world. We have received client feedback on our ability to serve them seamlessly. One large pension administration client, in particular, cited us as a key enabler to the success of their COVID-19 Business Continuity Plan (BCP). They recognized our contribution as key to the speed and efficiency of their BCP deployment, which is unparalleled in their peer group.

Making a real difference in the world

On behalf of our entire leadership team, I would like to thank our employees, partners, clients and stakeholders for another successful year in taking our business forward. In bringing our strategy to life in the years ahead, we’re excited by the opportunities in front of us to make a real difference in the world.

Stephen Liptrap
President and CEO

Stephen Liptrap